Sounds Crazy, But What is More Important - Sales or Profit?

Welcome back to the Business Freedom Podcast. Today's episode is called Sounds crazy but what is more important, sales or profit? And so I titled the podcast that way. We had a mastermind in our boardroom group which is the highest level of real estate B school. So these businesses are anywhere from 1.5 million GCI to to upwards of 5 million GCI. And we rolled out a module in our online member portal called Foundational Tools and it's actually across all of our programs. We just launched Business Foundations, which is a whole awesome thing. Go to getbusinessfoundations.com if you're under 500,000 GCI. Little quick plug there. So Business Foundations is our lower level group. It's month to month, graduate is 500,000 to 1.5 million GCI. And then 1.5 million plus is our boardroom Mastermind group which is invite only. And so we were having a conversation around one of these foundational tools. There's eight foundational tools that I created that are just foundational to you as a person and a business owner. And one of the tools, actually there's a few that I want to just briefly measure mention. So one is a personal wellness assessment. So just in all the areas of your life, just rating yourself once a month, how are you doing, you know, how are you doing with your faith walk with your physical body, with your relationships, those sorts of things, your finances. Then we do a strategic business assessment, very, very similar in all the areas of your business that matter. Your ability to track buyers and sellers, convert those buyers and sellers into, into clients, your servicing. So deliver world class service. Then your ability to create your future, know your numbers and grow your team. So those categorized, all of those. And once a month you rate yourself so you can focus on what you know, where to focus your efforts on in terms of what needs help in your business and what projects need to be done. And so one of the tools I went over was just summary financial performance. So once a month for all of our members, we collect their financial performance. And this is the area that I get super passionate about because our industry rewards the wrong thing. And I think it's one of the many things about the real estate industry that I think is broken. If you go to any market, you know, top producers or teams, nobody's talking about profitability and I guess nobody could because nobody's willing to share their numbers. I have this like awesome opportunity to see the financials of our members and also folks that I just have, you know, strategy sessions with. A strategy session is if you're running a bigger business. We have a conversation about your business and we talk about financials and those sorts of things and how we can shift them over time to build your business in a sustainable way so you don't have to grind in it forever. And so I've probably done over a thousand of those conversations with folks over the last seven plus years or so. And so a lot of folks have set their businesses up the wrong way from an economic model standpoint. And so they truly believe that sales, that's the only thing that matters. Or it's this belief like, if I can just sell more, everything's going to be okay. And I've seen businesses over 5 million in revenue where the business doesn't make more money than the owner's production. And if you take away the owner's production, they will lose a lot of money. And so these businesses, a lot of them are sort of facades. And there's no shame if you're running a business like that. It just means that if you want to get to the point one day where you take a step back from production and you turn it more into a business that's really profitable, that the business delivers this world class experience to your clients and your team members. So this internal and external sort of high performance environment, it takes you looking at your financial model and making some decisions around it. And so it was really just an awesome conversation where some folks, you know, really, even in our upper level group, their strategy is just to keep pushing sales. And I'm like, guys, there's one thing I want for you and this is just me talking to them openly. And these are my people. Like these are the guys and girls that are running great businesses that I just, I love them as people and I'll do anything for them. And I tell them, like me personally. So this is what I said, like, I'm not interested in selling more homes at a lower profit per sale. Like, it's just not something that I'm interested in. You know, the fun game to me is like, hey, how many homes can you sell without doing production yourself? And it's okay if you like production. So that's not a critique on, you know, some of our team leaders like the same production. But let's just say like a fun game to play is like, how can we scale your business without you being involved in all of it? And how profitable could we be per transaction? So let's sell less homes but make them more profitable. Let's have a simpler business, you know, so I can sell less than half the amount of homes, then our largest team in boardroom make more money profit wise and not sell any homes at all. And so that's been fun to me. It hasn't been easy. And, you know, we're helping all of our members, you know, really delink time and money and effort and stress and build these businesses that run, you know, without them tinkering with it. And so that's just part of why they come to real estate B school. I just thought it was a really interesting conversation. I want to share a quote with you, two quotes with you by Mike Michalowicz. It's from a book called Profit First. The first one is just awesome. It's profit is not an event, it's a habit. So the folks that push for more sales as their way to wealth or to profit, it's not like this magical day, like once I sell all these homes, the money's just going to flow in. It's not like that. It's picking an economic model and sticking with it no matter what, even if they're difficult decisions to make along the way. So I replace profit with wealth building. And so my version of this quote is wealth building is not an event, it's a habit. Or wealth is not an event, it's a habit. And I think a lot of agents and team leaders think that if I just push the top line, the bottom line is going to work itself out and it just doesn't work that way. Another quote by Mike Michalowicz, and I think this is his book, Clockwork is putting your nose to the grindstone. So putting your nose to the grindstone is a really easy way to cover up an unhealthy business. We think that if we can just work harder, longer, better, if we can just hold out, something good will happen one day. And that if there's not a quote, if there's a quote that epitomizes the real estate industry, it is that quote. How many folks do you know that are just giving away their entire seven days, all their sanity, and they don't have a lot to show for it. And so if we can just hold out, something good will happen one day. And it really fits in well with the Profit is not an event, it's a habit. And so if you're at the point in your journey where you're scaling or you want to scale and you don't understand the ramifications of setting your, your business up with the right economic model, you have to stop everything and learn that part first. It's not okay to just push into what you think should be or compare yourself to a brokerage and what they're offering for splits or like, hey, I'm just going to do Zillow. I know it's 35% to Zillow, but I'm just going to do Zillow and ramp that up. And like, you can't make money if you're paying 35% for marketing. You know, you can't be a viable business if someone else is doing your marketing for you. That's my biggest beef with Zillow. It's not that they don't work in some markets. In our market, they've just priced it to the point where we've been out of it for years. We don't pay for any leads on our team right now. Doesn't mean you can't use it for a period of time. The whole point, though, is that you need to know how much you can spend on leads. So your lead gen, your marketing, your advertising, your people. Like, there's a rule around how much you can spend on your people and then all your other overhead, and then there are rules around what you can pay your agents and what you can pay your broker. And these rules are irrefutable. You can't argue with them. And sometimes it's frustrating when I see someone going down a wrong path or they're in the midst of they're on the wrong path and it's still time that I can pull them over to the right path, they're just like, no, I'm good. Like, this is. This is great. This is going to work out great. And it doesn't work out great. It doesn't work out great. So if that's you and you're sort of unclear on what economic model or what should I pay my agents or I want to start a team. I want to get some time, money, freedom, and I really don't know how to do it. We just launched a new program called Business Foundations. It's for all the folks in our industry that haven't quite achieved. Achieved 500,000 GCI. So that's been the entry point for real estate B school. We still teach all the same things. It's just more of a foundational approach to it. There's live coaching four times a week and there's live training on Wednesdays that I do personally. And so getbusinessfoundations.com is where you want to go. Get businessfoundations.com and you will be blown away by the value provided in this program, every tool and system I've ever built, access to all of our library of live trainings. You'll have access to all of it. And just an unbelievable value in this program. And so. And it's month to month, so you cancel anytime you want, anytime you're not feeling like you're getting the value, which I think would be impossible. If you want to really build a legit business, this is where you need to be. And it's getbusinessfoundations.com we'll see you over there, Sam.